Ebook sales fall again - why?

Nicholas Clee
Opinion - Digital 07 November 2016

The ebook market was a bubble, inflated by over-enthusiasm and low prices

Continuing a trend first apparent in 2015, trade ebook sales declined 19% by value in the first half of this year, according to Publishers Association figures. It means not only that there has been a slowdown in the arrival of new ebook customers in the book market, but also that established ebook customers have reduced their spending on the format. Why is this?

Diminished enthusiasm for books cannot be the answer, because print book sales have gone up. But price is a factor. For reasons that are opaque to an outsider, Amazon, which won key battles on ebook pricing a few years ago, appears to have lost the war. The US courts and the European Commission both ruled that publishers and Apple had colluded unlawfully in their introduction of "agency" pricing, which Amazon abhorred; yet the same publishers were then able to introduce modified versions of the agency model - by which they set the prices, from which the retailer takes a commission - when they and Amazon renegotiated their trading deals. The result is that ebooks are more expensive than they were a few years ago, when Amazon bought books at discounts and set the selling prices itself.

Ebooks are highly price sensitive. Nielsen's Books & Consumers report for 2015 suggested that mainstream publishers' lost sales had migrated to self-publishers, whose prices are low. Among conventional houses, Head of Zeus and the digital first publisher Bookouture have enjoyed considerable success by pricing their ebooks competitively.

A second reason is the spread of tablets and tne near-ubiquity of smartphones. Any traveller on public transport can see that fellow travellers with electronic devices are mostly browsing social media or playing games rather than reading books.

A third reason, less widely noted, is that the ebook market in 2012, 2013 and 2014 was something of a bubble. Consumers who bought ebooks for the first time in these years were enthused not only about digital reading but about books in general, buying large numbers of ebooks as well as more print books than they had before acquiring their e-readers. But the enthusiasm did not last. Trend data showed that after a year, these consumers' ebook as well as print purchasing fell away. Perhaps they had loaded up their devices with too many ebooks that they had not got around to reading.

So it appears that ebook sales have fallen back to their natural level. Two developments might fuel a further boom: another breakthrough in e-reading technology, and a general lowering of ebook prices. The latter is unlikely. Current agency contracts have two great attractions for publishers: maintaining the value of their products, and restricting the negotiatining position and competitive leeway of the dreaded Amazon.

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